Lassen v. Arizona Ex Rel. Arizona Highway Department

Background

Arizona's Highway Department and the State Land Commissioner disagreed over how the State could use federally granted trust lands for highways and material sites. The Land Commissioner had rules letting the State grant rights of way and material sites without public auctions and require payment only of appraised value; the Arizona Supreme Court held highways always increase nearby trust land values enough to offset any payment, so no money need be paid. The United States and other parties asked the Supreme Court to resolve whether Arizona must follow the sale and auction rules and what compensation standard applies.

Reasoning

The Court held that the Enabling Act's auction and sale procedures need not apply to the State's acquisitions for its highway program, because those procedures were designed to prevent private abuse and to assure fair compensation, not to hinder legitimate public uses. But the Court also held that the State must pay actual money equal to the full appraised value of any rights of way or material sites it takes from the trust. The Court rejected the Arizona rule that presumed benefits always offset the cost, and it rejected allowing unproven or speculative estimates of increased value to reduce payment to the trust.

Real world impact

States may use streamlined procedures for acquiring trust land for public highways, so long as the methods protect the trust. However, States must give the trust full monetary compensation based on appraisal, not reduce payments by assuming added value to remaining lands. This decision is final for these issues and sends the case back to the Arizona courts for further proceedings.